Credit, collections & insolvency news

In the past six months, there has been a slew of reports calling for a fundamental change to public sector – and particularly council – collections. From the Treasury Select Committee to Citizens Advice and the Money Advice Service, the message is that the public sector needs to alter its approach.

The disparity between the treatment of ‘non-regulated’ debts and those covered by the Financial Conduct Authority can be stark. We know first-hand that our customers have suffered when bailiffs have been called in quickly, a habit that adds hundreds of pounds to bills they were already struggling to pay.

Councils face pressure to continue providing public services and should be taking legal action against those who can afford to pay but choose not to. Ethical debt collection does not mean being soft. However, too often those caught in these policies are unable to afford their bills – adding more figures to the debt isn’t going to help.

Instead, we believe councils should be working with residents to get an accurate picture of their financial situation and agreeing repayment plans that will be sustainable, thereby returning more money to the council in the long run.

Poor debt collection practices are not only ineffective in returning money to the public purse, they create social problems and induce extreme anxiety and stress in those affected. There are more humane ways of taking legal action than using bailiffs if it truly is required. These include applying for charging orders to ensure money is paid back when a home is sold or securing attachment of earnings to take money directly from a person’s pay packet.

In 2017 we launched a ground-breaking joint venture partnership with Hammersmith & Fulham Council. H&F Ethical Debt Collection is already applying FCA standards to the council’s debts and it has pledged to end the use of bailiffs for council tax. The framework agreement exists for more councils to follow suit and we have been in discussion with others keen to trial the approach.

Councils can test the results by passing segments of debt to us for collections – such as parking, housing or council tax. This phased approach allows them to experience the benefits of using a dedicated collections organisation that is experienced in contacting people in debt and working with them to help them find solutions.

For example, we have invested in AI-powered chatbots, online portals and text services to give residents options in how they engage. This is valuable and necessary – some may struggle to cope with letters or find phone calls intrusive.

In addition, our technology assists highly-trained teams in spotting vulnerability, even when a resident does not identify themselves as vulnerable. For example, speech analytics technology can flag mentions of words such as ‘cancer’ or ‘hospital’ and ensure the person is directed to teams that can help if they are struggling.

Collecting money owed is essential. Financially-sound local authorities are a crucial ingredient of a functioning society. Councils also have an obligation to take care of vulnerable residents and sensitive debt collection can ensure individuals confront their debts and are back on their feet sooner with fewer negative consequences.

We have won a string of awards for our ethical approach and hold an enviable net promoter score of +62% – unheard of in the debt collection industry. We believe the testimonials from those we help speak for themselves.

“Helpful, understanding and courteous. I had been afraid of getting in touch but if I ever hear of anyone being in the same pickle as I was, I would encourage them to phone as it gives you peace of mind after doing so. Thank you so very much.”

Members of council revenues and finance departments are invited to join Intrum in London on 7th February for a FREE Ethical Debt Collection Conference. They will hear from leading experts in the charity sector, financial regulation and local government, as well as seeing demonstrations of cutting-edge collections technology. For more information click here.